You have just won the jackpot of the prestigious raffle of the Club Optimiste de st-Loin-Loin du -Meuh-Meuh. Here are the details of the prize you have just won, which is made up of 2 parts.

1st part: For the next 5 years, you will receive $1000 at the end of each month (first payment in 1 month, last payment in 5 years.)

2nd part: Then, the bulk will be paid out as an annual payment of $5000 at the end of the following 5 years. So the first payment of this 2nd half will be in 6 years, and the last payment will be in 10 years.

The relevant interest rate is 7% effective annually. What is the total present value of the jackpot?

Answer rating: 100% (QA)

To calculate the present value of the jackpot we need to discount each future cash flow back to its ... View the full answer